How To Select The Best Offer For Your House
Our current seller’s market has been a result of low housing inventory compared to the number of homebuyers searching for houses. Often, home sellers end up with a multiple offer situation when placing their home on the market. It seems like knowing which offer to accept would be an easy decision. While choosing the highest offer seems obvious, it may not always be the best choice. Below, I’ve outlined other important factors when it comes to accepting an offer from a homebuyer.
Pre-Qualified And Pre-Approved Homebuyers
Most offers will include a letter from a financial institution indicating that a homebuyer is either pre-approved or pre-qualified for a mortgage loan. While people often use these terms interchangeably, there is a significant difference between the two.
Once a homebuyer discusses their financial situation with a mortgage lender, they can be issued a pre-qualification letter, which is an estimate of the loan amount a buyer will qualify for. At this point, the mortgage lender has not verified the accuracy of the provided information. A mortgage lender might produce a correct estimate for a homebuyer who is very knowledgable about their financial profile. However, home sellers should be aware that a lender has not yet verified income, assets, debt, or cash available for a down payment. In other words, a pre-qualification letter does not provide much confidence that the buyer will be able to close on the house.
On the other hand, a pre-approval letter requires a mortgage lender to run a credit check and verify the items provided by the homebuyer within the full loan application. Pre-approval letters require a more thorough process and are more preferred than pre-qualification letters.
Even though pre-approved buyers are much more desirable, it is still very important that the letter indicates the remaining conditions for loan approval. For example, all pre-approvals may change depending on the results of the home appraisal. Home sellers should inquire about the other conditions to the approval as well.
However, home sellers should note that neither letter guarantees a homebuyer will qualify for an actual loan because of other possible variables and issues, but a pre-approval carries more weight than a pre-qualification.
Consider The Contingencies
Nearly all contracts for sale and purchase include stipulations that allow buyers to cancel a contract for specific reasons. For example, almost all offers incorporate contingencies regarding appraisals and inspections. If the buyer is not able to get financing or the home inspection uncovers undesirable issues, the buyer can terminate the contract without penalty.
However, sometimes homebuyers have to sell the home they currently own in order to purchase a new one. This clause is another contingency that could be included in the contract. When in a multiple offer situation, home sellers should look for the one with the least amount of contingencies to improve the likelihood of the purchase closing.
How To Get Multiple Offers
Perhaps you are a home seller currently working to sell your house and you wish you had to choose between multiple offers. Fortunately, any house can receive multiple offers. To produce these circumstances, all you need is appropriate pricing and an aggressive marketing plan to ensure the entire pool of prospective buyers are aware of your home. Having both in place will increase your odds for receiving multiple offers on your home which is the best way for you to get top dollar for your house.
If you are thinking about selling your home, or are currently trying to do so, make sure that you choose an experienced and active real estate agent who can bring multiple buyers to the table and then assist you in negotiating the offer that will work best for you.